MENA region set for growth in 2011
Most oil exporters of the MENA (Middle East & North Africa) region will experience higher GDP (gross domestic product) in 2011. Gulf oil sector growth is likely in 2011, although nonoil private and government sectors will be the key catalysts for real GDP growth, Crédit Agricole CIB said in its latest report prepared by John Sfakianakis, Crédit Agricole CIB chief economist for the MENA region.
Saudi Arabia's private sector should expand 4.6 percent in 2011, with overall GDP growth of 4.2 percent in MENA's largest economy.
The UAE will benefit from Abu Dhabi's nonoil infrastructure and manufacturing expansion and revived trade, tourism and retail sales in Dubai. The bank expects UAE GDP growth of 3.4 percent in 2011, up from 2.5 percent in 2010.
Kuwait is also poised for higher economic growth as it rolls out a $104 billion investment plan, yielding GDP growth of 3.5 percent in 2011 from 3.2 percent in 2010. The plan is susceptible to fragile political consensus. Still the highest in MENA, GDP growth of natural gas exporter Qatar may fall to 12.4 percent in 2011 from 16.1 percent in 2010. For the oil producers, downside risks to the outlook are linked to oil prices, weak private sector recovery (deleveraging), which could impact banks' balance sheets, muted nonoil investments and deterioration in asset prices.
Corporate and sovereign MENA bond yields have declined during 2010 as market conditions have improved and Dubai World reached a deal with creditors to restructure $25 billion in debt. With tens of billions of dollars in Gulf debt due for refinancing in 2011, robust Q4 bond market activity should continue in 2011. Helping the bond market along will be lower costs to insure MENA sovereign debt. Still, any missteps by Dubai in dealing with more than $100 billion in outstanding debt could weigh on risk appetite across MENA.
Equity markets in the Gulf have witnessed slower performances than Egypt as confidence is still low.